The V-shaped recovery in the first quarter of 2021-22, despite the brutal second wave of the coronavirus pandemic, is a testimony to India's strong macroeconomic fundamentals, according to the Finance Ministry.
In its latest Monthly Economic Review, the Finance Ministry also expressed concern over high incidence of COVID-19 cases in Kerala and Maharashtra and underlined the need for strengthening pandemic control and management in these two states.
The Indian economy grew by 20.1 per cent in the first quarter of the current financial year reaffirming, "India's resilient V-shaped recovery despite an intense second wave," it said.
Hit hard by the coronavirus pandemic, the economy had dipped by 24.4 per cent during the first quarter of the previous fiscal.
Going forward, the report said the agriculture sector continues to offer comfortable prospects with Kharif sowing at 101 per cent of normal levels as on September 3, despite a 9 per cent deficient monsoon so far in the year.
Record-high paddy procurement and increasing tractor sales augur well for strengthened rural demand in the coming months, it said, adding, Industry is steadily gaining lost ground with June's IIP witnessing a broad-based growth, having recovered close to 95 per cent of pre-pandemic levels of June 2019.
More recently, the eight-core industries index for July 2021, rose by 9.4 per cent year-on-year (YoY)with all sectors except crude oil and refinery products surpassing pre-pandemic levels, it said.
"The fast-paced recovery is further evident in growth of power consumption, rail freight, highway toll collections, e-way bills, digital transactions, air passenger traffic and robust GST collections. India's PMI Composite index including both manufacturing and services is comfortably placed at 55.4, signalling commencement of economic expansion," it said.
On the flip side it said, the looming fear around the Delta variant of COVID-19 has once again cast a shadow necessitating sustained precautions against it with greater focus on testing, tracking and adopting COVID-19 appropriate behaviour.
Kerala remains a concern accounting for around 60 per cent of daily new cases in the country and reporting the highest daily deaths across all states, it said.
While experts have cautioned against a potential third wave in the oncoming festive months, pandemic control and management needs to be strengthened with Maharashtra and Kerala presently accounting for 70 per cent of the active cases in the country, it added.
On the revenue collection side, it said, the central government finances improved during April 2021, to July 2021 over the corresponding period of previous year, with both direct and indirect taxes showing a significant YoY growth.
Observing that the robust recovery in tax collections augurs well for the government to provide the required budgeted support to the economy, the report said, the recent decision to repeal the retrospective tax law introduced in 2012, further reflects the commitment of the government towards providing a stable and predictable tax regime for all stakeholders.
